Earlier this afternoon the Reserve Bank of Australia (RBA) board opted to leave the cash rate on hold (yet again), at a record low of just 1.50%. Below, we explore RBA’s reasoning for the decision by dissecting RBA Governor Philip Lowe’s official media statement (released at 2:30pm AEST today), plus we take a look at first home buyer options for those looking to enter the property market before the end of the year.
— FHBA (@fhba_com_au) October 3, 2017
RBA on the Economy
- “The Australian economy expanded by 0.8% in the June quarter. This outcome and other recent data are consistent with the Bank’s expectation that growth in the Australian economy will gradually pick up over the coming year”.
- “Over recent months there have been more consistent signs that non-mining business investment is picking up”.
- “Business conditions as reported in surveys are at a high level”
- “A large pipeline of infrastructure investment is also supporting the outlook”.
- “The decline in mining investment will soon run its course”.
- “The outlook for non-mining investment has improved recently and reported business conditions are at a high level”.
- “Residential construction activity remains at a high level, but little further growth is expected”.
- On the flip side to these positives above, “slow growth in real wages and high levels of household debt are likely to constrain growth in household spending”.
RBA on Employment
- “Employment has continued to grow strongly over recent months. Employment has increased in all states and has been accompanied by a rise in labour force participation”.
- “The various forward-looking indicators point to solid growth in employment over the period ahead, although the unemployment rate is expected to decline only gradually over the next couple of years”.
- “Wage growth remains low. This is likely to continue for a while yet, although the stronger conditions in the labour market should see some lift in wage growth over time”.
RBA on Inflation
- “Inflation also remains low and is expected to pick up gradually as the economy strengthens”
RBA on the Property Market (no change)
- “Conditions in the housing market continue to vary considerably around the country. Housing prices have been rising briskly in some markets, although there are signs that conditions are easing, especially in Sydney. In some other markets, prices are declining”.
- “In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years”.
- “Rent increases remain low in most cities”.
- “Investors in residential property are facing higher interest rates. There has also been some tightening of credit conditions following supervisory measures to address the risks associated with high and rising levels of household indebtedness. Growth in housing debt has been outpacing the slow growth in household incomes”.
I’m about to be in the market for a home loan
- If you are getting close to buying your first home why not check out this easy to use home loan comparison table to see a range of rates currently on offer.
- Got questions and wondering what the next steps are? We recommend you arrange an appointment with an FHBA Lending Adviser who can discuss your circumstances, help you determine your borrowing capacity, showcase home loan options you may be eligible for and go through the home loan process with you. For more on FHBA Mortgages please click here.
I’m still saving for a home deposit
Unfortunately the rate of interest on savings accounts are relatively low at the moment. But when saving for a home deposit, as cliche as it may sound, every bit really does counts. See if you can give your savings a boost by checking out these free & easy to use saving accounts comparison tables!
I want to know more about the RBA decision
To read the full RBA statement from the October board meeting please click here.
Did you know?
Did you know that you can protect yourself from a rate rise as a mortgage borrower? A fixed rate home loan allows you to lock in an interest rate for a period of time, such as 1 year – 5 years. This gives borrowers certainty around home loan repayments. But how do you choose whether to get a fixed rate home loan or the more common variable rate home loan? Click here to learn more about your home loan options.
The next RBA board meeting
The next RBA board meeting will be held on Tuesday the 7th of November 2017 (Melbourne Cup day).
First Home Buyers Australia
Not sure whether you have saved enough to enter the property market? Try our FHBA Deposit Estimator for free!